Finance Minister Honourable Tendai Biti announced a US$2.7 billion 2011 National Budget statement on November 25, 2010. The budget theme was “Shared Economy, Shared Development, Shared Transformation – “Creating the Fair Economy. In the statement, the Minister announced the tax proposals for 2011.

 

 

 

He said, “The tax proposals are anchored on implementing measures aimed at supporting the productive sectors, availing relief to individual taxpayers, strengthening the tax administration, and improving transparency and accountability in business.”

This year’s budget saw an increase in the tax-free threshold to US$225, up from US$175, while the tax-free bonus portion was raised to US$500 from US$400 as the nation enters the festive season. The new thresholds will release a few extra dollars into taxpayers’ pockets.

 

The duty-free facility for imported basic commodities was extended to June 2011. The Minister also proposed a reduction of duty on motor vehicles exceeding 1 500cc from between 40% and 60% to 40%. The valuation of imported second-hand vehicles will be reviewed and be based on a standard model. The Minister also made a reduction of duty on selected household goods, such as television sets and selected medical apparatus. The reductions are effective January 1, 2011.

The Minister also proposed lowering customs duty on textiles, clothing and footwear – something cross-border traders are bound to welcome.

Increases in mineral taxes, royalties and import duties on cigarettes and imported spirits are expected to make up for the anticipated losses from Pay As You Earn (PAYE) and other tax concessions.

In another development that is set to compensate loss of revenue from these tax concessions, the Minister proposed to use local authorities to collect presumptive tax from small businesses such as commuter omnibuses, hair salons, small-scale miners and cottage industries among others. Local authorities are expected to check compliance by businesses whenever they renew operating licences. The local authorities will retain 10% of collected revenue. The Minister also mentioned the mileage being taken by the ZIMRA in improving revenue collection through the process of electronic filing of returns.

 

The Minister said, “Unlike the manual system of filing returns, which can take days or even weeks to be registered at the ZIMRA offices, the primary benefit of electronic filing is the speed at which the process is completed. Electronic filing, thus, saves time and associated costs incurred by both taxpayers and the revenue authority, as well as enhancing management of taxpayer information.”

 

The budget also caters for the constitutional referendum and elections next year. The Minister also set aside US$1,4 billion for civil service remuneration, of this US$1,1 billion will be devoted to the provision of remuneration for state workers while US$300 million  will cover pensions, medical aid and social security contributions.

Click here for the full budget statement.